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Average American expects to be debt free by age 53

Independence from debt will come at age 53, say Americans in a new poll commissioned by CreditCards.com. But at each age group, expectations for a clean slate remain in the future, just out of reach.

"We see lots of people with fairly high incomes -- they should be comfortable," said Sandy Shore, a consumer finance expert with the credit counselor Novadebt. "But their spending is just somewhat more (than income), and they're falling further behind."

The poll asked people to predict when they will win independence from all their debts, including mortgages and credit card debt. Among the key findings:

When asked, "When do you expect to be debt free?," 9 percent of Americans answered "never."

The age of predicted debt freedom was 53 on average.

People 18-24 are the most optimistic, predicting debt freedom at about age 33; but the prediction keeps advancing, as 25-34 year olds predict age 38; 35-49 year olds predict age 56; 50-64 year olds predict age 62; and at age 65-plus, debt freedom is expected at age 77.

"We, especially Americans, tend to be an optimistic crowd," said Kit Yarrow, a professor of psychology and marketing at Golden Gate University. "We generally tend to overestimate how quickly we'll lose weight or get out of debt."

Not-so-great expectations The telephone survey of 1,007 adults fielded by GfK Roper May 31 through June 2, 2013, includes a mix of responses from singles and couples, as well as people with mortgage debt and those without.

The results show traces of the housing boom and bust, as people heading into their sunset years expect to drag a load of payments along with them. Among people age 65 and up, nearly 23 percent expect their debts to outlive them.

That prediction jibes with research by the Employee Benefit Research Institute, which found that large mortgage debts are following seniors into old age. EBRI's February 2013 study found that more than half of people now age 55 to 64 still face substantial debts.

"The group from 55 to 64 have been taking on more debt," said Craig Copeland, senior research associate at EBRI and author of the study " Debt of the Elderly and Near Elderly, 1992-2010 ." "If people in that group were in better (financial) condition, it would help them be better prepared -- because when they hit 65, they'll probably be on a fixed income."

Retirees in debt How do expectations about future debt measure up to the reality? Many people facing retirement soon have sizeable debt burdens, and few traditional working years to pay it down, according to EBRI's study.

About 63 percent of families headed by someone over age 55 are still shouldering debt payments, EBRI found. Their average burden was $75,082 in 2010 -- up about $1,400 since 2007. Housing is the main culprit, as the house price bubble and home equity borrowing binge of past years saddled people with outsize costs that take many years to pay off.

Not surprisingly, the size of a debt load weighs down hopes of paying it off. Of people with $50,000 to $100,000 of debt, 48 percent expected to still be making payments after age 60, the CreditCards.com survey found. By comparison, just 39 percent of people with $10,000 to $50,000 in liabilities expect payments to last that long.

People with the least debt were not the most optimistic, however; 41 percent of people with less than $1,000 in debt expect to be making payments after age 60. The gaps in people's expectations may reflect differences in income and education as well as sheer debt levels. People with more than $250,000 in debt were more optimistic about paying it off by 60 than those with less than $1,000.

The difficulty of getting out of debt is not just a matter of how deep the hole is, Yarrow of Golden Gate University noted. "It's kind of like the Olympics -- you have to factor in the difficulty of the project in order to give it a rating," she said. Income and expenses -- which in turn are heavily influenced by family size and region of the country -- contribute to debt gaps between households.

Making a plan, then following it are keys to eliminating debt, but it is a heavy lift for many. A financial education survey released in May found that 40 percent of adults lacked any savings, even a rainy-day fund for emergencies.

"The problem with a lot of things people work toward is they have to be not doing something -- not eating to lose weight or not spending money (to reduce debt)," Yarrow said. "In the abstract, not doing something seems easy -- but it's not."

Poll methodology The survey of 1,007 U.S. residents 18 and up was conducted May 31 through June 2, 2013, via random dialing of a blend of landline and cellphone numbers. The results were weighted by age, sex, education, race and geographic region. The margin of error is plus or minus 3 percentage points for the full sample, with a confidence interval of 95 percent.

The results are based on responses to these questions:

Thinking now about personal debt -- that is the amount of debt you have when you think about your credit card bills, car loans, student loans or any other types of loans, mortgages, etc., -- about how much personal debt would you say you have today?

By what age do you expect to be debt-free? If you're not sure, your best guess will do.